California economic developers these days have it tough – small staff, limited means of recurring funds, and a sluggish economic recovery outside of the Peninsula. Outside funding is critical; one example is the California Competes Tax Credit (CCTC), one of the Governor’s Economic Development Initiatives from 2014.
CCTC is a state tax credit program available to business owners looking to expand or relocate. It is tied to new hiring and investment over a five-year period. In 2016-17 alone, the Governor’s Office of Business Development (or GO-Biz) anticipates awarding $243.3 million in tax credits. The amount of the 5-year investments from the CCTCs awarded in 2015-16 was more than $1.92 billion. That’s $1.92 billion in local hiring and real estate investment triggered in a single year across the state.
Many communities are doing better than others in capturing these benefits. For example, the City of Los Angeles has a little over 11.3% of the total state employment, but less than 1.7% of the tax credits have been awarded to LA businesses over the first three years. On the other hand, the City of Oroville has only 0.03% of the total state employment, but has captured 0.53% of the CCTCs, nearly 18 times greater than its share of the population.
Few cities have dedicated attention to strategizing how to capture more CCTC benefits. What can you do as a city economic developer?
1. Find out more about the CCTC program. The GO-Biz team conducts a number of training sessions and webinars around the state at the beginning of each fiscal year and can put together a customized program anytime.
2. Provide site selectors, local accountants, businesses, and brokers information about the program, either with a marketing campaign or outside help to reach these stakeholders.
3. Consider hosting CCTC application events at your local chamber’s offices or at City Hall. Businesses can fill out the application online, and you can help them to get started.
4. Make sure your website has information about the program, so it is clear that your community is eligible for these funds.
5. Measure your performance each year relative to your neighboring communities and past success.
What other ideas have you tried?
Written by Jim Simon, a Principal at RSG